In Focus

CII Supports SEC Proposal on Universal Proxies and Clear Disclosure of Vote Standards

The Council of Institutional Investors on Dec. 28 submitted to the SEC a comment letter on the SEC proposal for required use of universal proxies in contested elections, and for clear disclosure of voting standards in uncontested elections. CII commended the SEC for proposed amendments that address major longstanding investor concerns, and that are "well-researched, thoughtful and appropriate." The universal proxy proposal is an initiative to ensure that ballots for director elections include all nominees.

CII Publishes Guide to Majority Voting for Directors

As U.S. public companies embrace majority voting in uncontested director elections, CII has published an FAQ (Frequently Asked Questions) guide  that explains the different approaches that companies are taking and which iteration shareholders believe to be the most effective.
Companies claim to use majority voting if they require board nominees to receive a majority of “for” votes in uncontested elections for corporate board seats. But in practice, voting standards vary from plurality to “plurality plus” to majority voting that lets boards overrule shareholders’ preference to majority voting with real teeth.
The FAQ outlines the different approaches and why CII advocates strict majority voting, with directors departing when they receive more “against” votes than “for” votes. CII is engaged in a broad campaign to encourage all companies in the Russell 3000 index to adopt meaningful majority voting. CII also supports an SEC proposal to require companies to use clear terminology in proxy statements about their vote standard.  An appendix in the FAQ offers sample bylaw language for consequential majority voting that complies with Delaware corporation law.

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CII Priorities

Majority Voting for DirectorsIn uncontested elections, directors should be elected by majority vote.

Universal Proxy In contests, investors should be free to vote for the nominees they prefer.

Proxy Access Long-term shareowners should have access to the proxy to nominate corporate directors.

Dual-Class Stock Each share of a public company's common stock should have one vote.

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